Saturday, October 25, 2008

From The Wisdom of Mike Huckabee

I was watching Fox News this morning and the former Governor of Arkansas, Mike Huckabee, made an excellent point.

Obama's comment of "spread the wealth around" might sound OK to some lower and middle class working Americans who see 'wealth' and 'rich' as being somewhat the same things. Mike Huckabee pointed out the fact that Barack Obama isn't really talking about spreading "wealth" around. Instead, he is actually talking about spreading hard-earned "income" around to those at the lower ends of the pay scale. And that, for sure, is socialism. That subtle distinction between "wealth" and "income" speaks more clearly to Obama's tax plan.

There is an attitude, by many Democrats, that someone who makes "a lot of money," got that way by either an accident of birth, or by simply getting that money off the backs of poorer workers. Working hard towards an education and working hard in their job and using that hard work and their ideas to create other jobs, never seems to enter into the minds of those politicians. Those same politicians also have much difficulty deciding what constitutes "a lot of money." If you are worried about someone who makes minimum wage of around $10,000, a $40,000 a year salary can be seen as a lot of money. However, in some cities, like San Francisco, $40,000 could be considered a minimum living wage.

I have always said that if you gave $50,000 each to 4 average, working Americans to create a new business within two year's time and, then, gave the same amount of money to a former CEO to do the same, the odds would be greater that the CEO will be the only one out of that group to actually create a viable business and a business that would employ more workers than just himself. That's because the failure rate of all new businesses in this country is about 80 percent. Not included in that statistic is the number of businesses that fail to even get started. The CEO has the better chance of success because of his experience in understanding business and in operating one.

Sure, the are a lot of plumbers and painters and other tradesmen that have gone on to create their own businesses. If you talk to them, you will generally find out that their first years were generally touch and go. Often, not always, several years of working alone to build the business had to pass by before the customer base was large enough to employ another worker.

On the flip side of that, take somebody like Ross Perot. He became a billionaire because he was able to see a specific need in the marketplace of mainframe computing. He was a hard working, top salesman for IBM for five years from 1957 to 1962. He left IBM in 1962 and started a company called Electronic Data Systems or EDS. After many struggles in getting the business started, EDS finally became a publicly traded corporation in 1968. In 1984, he sold EDS to General Motors for 2.4 billion dollars. Now owned by Hewlitt-Packard, EDS has grown to 137,000 employees in 65 countries with revenues in excess of $22 billion dollars. Then, the restless Perot footed the bill for Steve Jobs (of Apple Computer fame) to start a company called NeXT in 1986. That created another 552 jobs until that company was bought up by Apple Computer in 1996 for $429 million dollars. Still restless, Perot created another company in 1988 called Perot Systems. Still in operation today, Perot Systems is generating $2.77 billion in sales and has 23,100 employees. One man, Ross Perot, has made taxable billions in profits for our country. His companies have resulted in jobs for more than 160,000 workers who are mostly college educated and who get paid very well. These are hardly minimum wage jobs!

I get a little tired of the erroneous philosophy that economies are built from the ground up or from the worker level, and that our tax system should reflect that. There are many, many Ross Perot's in this country who have done much to create both jobs and taxable wages and taxable company profits who have, literally, kept this country going. Now, Barack Obama and the Democrats, through the imposition of heavier taxation, want to hamper the ability for these kinds of businessmen, like Ross Perot, to create new taxpaying businesses and create a lot of new and taxpaying jobs.

There is this childish belief that, somehow, people who have made money just let it sit around and spend their time counting it. Some politicians seem to think this money would be better used if scooped up by our government and spread around. But, that's hardly close to the truth. That is not understanding how capitalism works. Unless that money is sitting in a cookie jar or lying under someone's mattress, at the very least, it is being put to work by depositing it into a bank account. Then, that bank will generate income and taxes of it's own by using that money to give out loans so that you and I can buy a car or a house or start a business. If the house that is being purchased is a new house, American laborers are definitely put to work. A real estate agent might get involved in selling the old house and they will pay taxes on that income. That may or may not be completely the case when a car loan is given out because the car, itself, might be imported. But all those who handle the transaction on this side of the shore will benefit from work and will, subsequently, pay taxes. When a loan is given for a new business, that new venture can generate tax revenues and, if really successful, create new jobs.

Giving people a $1000 check isn't necessarily a bad thing. But, don't ever try to say it would be as good or better economically as keeping taxes low. This is a pure fantasy that those "bottom uppers" would have you believe. More often than not, much of that $1,000 will go to some product that is being imported. There is also a tendency to "buy better" and, not necessarily buy more stuff. Buying better doesn't create new jobs because there is no increase in the quantity of things being bought. Finally, there is a false belief that all those receiving a government check will use it wisely. That, too, is a complete fallacy. There is story after story of people winning the lottery who are now, once again, flat broke.

Generally speaking, people who work hard to amass some amount of savings or some amount of wealth can better appreciate the value of that money rather than someone to whom it has merely been given.

No comments: